UNIT- 1

Human Resource Management (HRM) is an operation in companies designed to

maximize employee performance in order to meet the employer's strategic goals and
objectives. More precisely, HRM focuses on management of people within companies,
emphasizing on policies and systems. Human resource management is the strategic approach
to the effective management of people in an organization, so that they help the business gain
a competitive advantage.

In short, HRM is the process of recruiting, selecting employees, providing proper orientation
and induction, imparting proper training and developing skills.

HRM also includes employee assessment like performance appraisal, facilitating proper
compensation and benefits, encouragement, maintaining proper relations with labor and with
trade unions, and taking care of employee safety, welfare and health by complying with labor
laws of the state or country concerned.

 The Scope /Function of HRM

The scope of HRM is very wide. It consists of all the functions that come under the banner of
human resource management. The different functions are as follows −

 Human Resources Planning

It is the process by which a company identifies how many positions are vacant and whether the
company has excess staff or shortage of staff and subsequently deals with this need of excess or
shortage.

 Job Analysis Design

Job analysis can be defined as the process of noticing and regulating in detail the particular job
duties and requirements and the relative importance of these duties for a given job.

Job analysis design is a process of designing jobs where evaluations are made regarding the data
collected on a job. It gives an elaborate description about each and every job in the company.

 Recruitment and Selection

With respect to the information collected from job analysis, the company prepares
advertisements and publishes them on various social media platforms. This is known
as recruitment.
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A number of applications are received after the advertisement is presented, interviews are
conducted and the deserving employees are selected. Thus, recruitment and selection is yet
another essential area of HRM.

 Orientation and Induction

After the employees are selected, an induction or orientation program is organized. The
employees are updated about the background of the company as well as culture, values, and
work ethics of the company and they are also introduced to the other employees.

 Training and Development

Employees have to undergo a training program, which assists them to put up a better
performance on the job. Sometimes, training is also conducted for currently working
experienced staff so as to help them improve their skills further. This is known as refresher
training.

 Performance Appraisal
After the employees have put in around 1 year of service, performance appraisal is organized
in order to check their performance. On the basis of these appraisals, future promotions,
incentives, and increments in salary are decided.

 Compensation Planning and Remuneration

Under compensation planning and remuneration, various rules and regulations regarding
compensation and related aspects are taken care of. It is the duty of the HR department to look
into remuneration and compensation planning.

OBJECTIVES  

• To achieve and maintain high morale among employees. 

• To develop and maintain a quality of work life. 
• To be ethically and socially responsive to the needs of society. 
• To enhance employee's capabilities to perform the present job. 

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 HUMAN RESOURCE POLICIES
-A policy is a plan of action. It is a statement of intention committing the
management to a general course of action.
Examples of specific HR policies:
1. Policy of hiring people with due respect to factors like reservation, sex, marital status etc.
2. Policy on terms & conditions of employment- compensation policy &
methods, hours of work, overtime, promotion, transfer, lay-off.
3. Policy with regard to medical assistance-sickness benefits, company medical benefits.
4. Policy regarding training & development – need for, methods, frequency of training and
development.

5. Policy regarding housing, transport, uniform & allowances.

HRM Policies and HRM Policies Relationship with other Fields

The system and methods of human resource management are mostly based on its policies. HRM
policies help the organisation in terms of attainment of organisational goals, increasing the
efficiency, adaptability and achieving of long-run results. Thus, the formulation of HRM policies
takes help from other fields. The HRM policies Relationship with other fields can be seen as
follows: [ HRM Policies Relationship ]HRM Policies Relationship

1. Health and safety: Managers at all levels are expected to know and enforce safety and
health standards throughout the organisation. They must ensure a work environment that
protects employees from physical hazards, unhealthy conditions and unsafe acts of other
personnel. Through proper safety and health policies, the physical and psychological well-being
of employees must be preserved and even improved.

2. Employee welfare: Employee welfare includes the services, amenities and facilities
offered to employees within or outside the establishment for their physical, psychological and
social well-being. Housing, transportation, education and recreation facilities are all included in
the employee welfare policies.

3. Social security measures: Managements provide social security to their employees

in addition to fringe benefits. These measures include:
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(a) Workmen’s compensation to those workers (or their dependents) who are involved in
accidents;
(b) Maternity benefits to women employees;
(c) Sickness benefits and medical benefits;
(d) Disablement benefits/allowance;
(e) Dependent benefits;

4. Grievance Handling: A grievance is any factor involving wages, hours or conditions of

employment that are used as a complaint against the employer. Constructive grievance
handling depends first on the manager’s ability to recognize, diagnose and correct the causes of
potential employee dissatisfaction before it converts into a formal grievance.

5. Trade unions and employees association: Trade union is an association either

of employees or employers or independent workers. It is a relatively permanent a body formed
by workers with the objective of countering exploitation and harassment. It strives towards
providing economic and social benefits to the labour community. Trade unions have always
played a powerful role in improving a lot of workers in India, using aggressive bargaining tactics.
However, since the 90’s, the situation changed dramatically. Unable to fight the forces of
competition, many employers have been forced to shut down units and scale down operations.
This has made both parties realise the importance of bargaining for their rights in an
atmosphere of ‘give and take’. [ HRM Policies Relationship ]

6. Industrial relations: Harmonious industrial relations between labour and

management are essential to achieving industrial growth and higher productivity. When the
relationship between the parties is not cordial, discontentment develops and conflicts erupt
abruptly. It is not always easy to put out the fires with the existing dispute-settlement-
machinery, created by the government. Hence both labour and management must appreciate
the importance of openness, trust and collaboration in their day-to-day dealings.

E- HRM
 E-HRM is the integration of all HR systems and activities using the web based technologies.
Simply, when HR uses the Internet or related technologies to support their activities, procedures,
processes, then it becomes an e-HRM. E-HRM is the (planning, implementation and) application
of information technology for both networking and supporting at least two individual or
collective actors in their shared performing of HR activities.

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 Types of E-HRM
There are three types of E-HRM. These are described respectively as Operational,
Relational and Transformational.
1. Operational E-HRM is related with administrative functions-payroll and
employee personal data for instance. Operational type of HRM provides the
choice between asking employees to keep their own personal data up to date
through an HR website or to have an administrative force in place to do this.
2. Relational E-HRM is related with supporting business processes by ways of
training, recruitment, performance management and so forth. As to relational
HRM, there is the choice between supporting recruitment and selection through a
web-based application or using a paper-based approach (through
advertisements, paper- based application forms and letters etc.).
3. Transformational E-HRM is related with strategic HR activities known as
knowledge management, strategic re-orientation. As to transformational HRM, it
is possible to create a change-ready workforce through an integrated set of web-
based tools that enables the workforce to develop in line with the company’s
strategic choices or to have paper-based materials.

RECENT TRENDS IN HRM

The world of work is rapidly changing. As a part of organization, Human Resource

Management (HRM) must be prepared to deal with effects of changing world of work.
For the HR people it means understanding the implications of globalization, work-force
diversity, changing skill requirements, corporate downsizing, continuous improvement
initiatives, re-engineering, the contingent work force, decentralized work sites and
employee involvement for which all and more have the financial implication to
organization. Let alone on the employees side where engagement, satisfaction,
motivation, retention, absenteeism, turnover have to be checked. As a rule human
resource management has to venture into new trends in order to remain relevant
corporate development partner. Look at the new trends bellow:

1. Globalization and its implications

Business today doesn’t have national boundaries – it reaches around the world. The rise
of multinational corporations places new requirements on human resource managers.
The HR department needs to ensure that the appropriate mix of employees in terms of
knowledge, skills and cultural adaptability is available to handle global assignments. In
order to meet this goal, the organizations must train individuals to meet the challenges
of globalization. The employees must have working knowledge of the language and
culture (in terms of values, morals, customs and laws) of the host country. Human
Resource Management (HRM) must also develop mechanisms that will help
multicultural individuals work together. As background, language, custom or age

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differences become more prevalent, there are indications that employee conflict will
increase. HRM would be required to train management to be more flexible in its
practices. Because tomorrow’s workers will come in different colors, `nationalities and
so on, managers will be required to change their ways. This will necessitate managers
being trained to recognize differences in workers and to appreciate and even celebrate
these differences.

2. Work-force Diversity

In the past HRM was considerably simpler because our work force was strikingly
homogeneous. Today’s work force comprises of people of different gender, age, social
class sexual orientation, values, personality characteristics, ethnicity, religion,
education, language, physical appearance, marital status, lifestyle, beliefs, ideologies
and background characteristics such as geographic origin, tenure with the organization,
and economic status and the list could go on. Diversity is critically linked to the
organization’s strategic direction. Where diversity flourishes, the potential benefits from
better creativity and decision making and greater innovation can be accrued to help
increase organization’s competitiveness. One means of achieving that is through the
organization’s benefits package. This includes HRM offerings that fall under the heading
of the family friendly organization. A family friendly organization is one that has flexible
work schedules and provides such employee benefits such as child care. In addition to
the diversity brought by gender and nationality, HRM must be aware of the age
differences that exist in today’s work force. HRM must train people of different age
groups to effectively manage and to deal with each other and to respect the diversity of
views that each offers. In situations like these a participative approach seems to work
better.

3. Changing skill requirements

Recruiting and developing skilled labor is important for any company concerned about
competitiveness, productivity, quality and managing a diverse work force effectively.
Skill deficiencies translate into significant losses for the organization in terms of poor-
quality work and lower productivity, increase in employee accidents and customer
complaints. Since a growing number of jobs will require more education and higher
levels of language than current ones, HRM practitioners and specialists will have to
communicate this to educators and community leaders etc. Strategic human resource
planning will have to carefully weigh the skill deficiencies and shortages. HRM
department will have to devise suitable training and short term programs to bridge the
skill gaps & deficiencies.

4. Corporate downsizing.

Whenever an organization attempts to delayer, it is attempting to create greater

efficiency. The premise of downsizing is to reduce the number of workers employed by
the organization. HRM department has a very important role to play in downsizing.
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HRM people must ensure that proper communication must take place during this time.
They must minimize the negative effects of rumors and ensure that individuals are kept
informed with factual data. HRM must also deal with actual layoff. HRM dept is key to
the downsizing discussions that have to take place.

5. Continuous improvement programs

Continuous improvement programs focus on the long term well-being of the

organization. It is a process whereby an organization focuses on quality and builds a
better foundation to serve its customers. This often involves a companywide initiative to
improve quality and productivity. The company changes its operations to focus on the
customer and to involve workers in matters affecting them. Companies strive to improve
everything that they do, from hiring quality people, to administrative paper processing,
to meeting customer needs.

6. Re-engineering work processes for improved productivity

Although continuous improvement initiatives are positive starts in many of our

organizations, they typically focus on ongoing incremental change. Such action is
intuitively appealing – the constant and permanent search to make things better. Yet
many companies function in an environment that is dynamic- facing rapid and constant
change. As a result continuous improvement programs may not be in the best interest of
the organization. The problem with them is that they may provide a false sense of
security. Ongoing incremental change avoids facing up to the possibility that what the
organization may really need is radical or quantum change. Such drastic change results
in the re-engineering of the organization.

7. Contingent workforce

A very substantial part of the modern day workforce are the contingent workers.
Contingent workers are individuals who are typically hired for shorter periods of time.
They perform specific tasks that often require special job skills and are employed when
an organization is experiencing significant deviations in its workflow. When an
organization makes its strategic decision to employ a sizable portion of its workforce
from the contingency ranks, several HRM issues come to the forefront. These include
being able to have these virtual employees available when needed, providing scheduling
options that meet their needs and making decisions about whether or not benefits will
be offered to the contingent work force.

8. Mass Customization

There is a lot going on already within HR concerning mass customization, the optimal
combination of mass production with customization. We’ve seen companies basing
employment arrangements on learning styles and personalities, allowing employees to
choose between lower base pay and higher bonuses vs. higher base pay and lower
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bonuses, and changing from career ladders with a straight shot to the top to career
lattices where a sideways move is considered a good career move. Here, HR has done a
great job of applying HR principles to its own traditional functional processes.

HR will need to take the tools of marketing around customization for consumers and
clients and applying them to the task of talent segmentation. The key is to optimize. At
one extreme, a personal employment deal for every individual would be chaotic. At the
other extreme, defining fairness as “same for everyone” risks missing important benefits
of customization, and in fact may be unproductive and unfair.

9. Decentralized work sites

Work sites are getting more and more decentralized. Telecommuting capabilities that
exist today have made it possible for the employees to be located anywhere on the globe.
With this potential, the employers no longer have to consider locating a business near its
work force. Telecommuting also offers an opportunity for a business tin a high cost area
to have its work done in an area where lower wages prevail.

Diversity Management

Diversity management refers to organizational actions that aim to promote greater

inclusion of employees from different backgrounds into an organization’s structure
through specific policies and programs. Organizations are adopting diversity
management strategies as a response to the growing diversity of the workforce around
the world. The practice of addressing and supporting multiple lifestyles and personal
characteristics within a defined group. Management activities includes educating the
group and providing support for the acceptance of and respect for various racial,
cultural, societal, geographic, economic and political backgrounds.

Types of Diversity Management

The following are the two types of diversity management:

1. Intranational diversity management

Intranational diversity management refers to managing a workforce that

comprises citizens or immigrants in a single national context. The diversity programs
focus on providing employment opportunities to minority groups or recent
immigrants. For example, a French company may implement policies and programs
with the aim of improving sensitivity and providing employment to minority ethnic
groups in the country.

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 2. Cross-national diversity management

Cross-national, or international, diversity management refers to managing a

workforce that comprises citizens from different countries. It may also involve
immigrants from different countries who are seeking employment. An example is a US-
based company with branches in Canada, Korea, and China. The company will establish
diversity programs and policies that apply in its US headquarters as well as in its
overseas offices. The main challenge of cross-national diversity management is that the
parent company must consider the legislative and cultural laws in the host countries it
operates in, depending on where the employees live.

Your workforce, your customers, and your markets are increasingly diverse. To promote
individual and organizational success, you must welcome diversity and manage it well.

These five steps will help you to manage diversity effectively.

Five Key Steps

 

1. Emphasize communication: Ensure that all employees understand your policies,

procedures, safety rules, and other important information. Work to overcome language and
cultural barriers. Have key materials, such as safety information, translated when possible.
Use pictures and symbols on warning signs so that everybody can understand.
2. View employees as individuals: Avoid both positive and negative stereotypes. Don’t make
assumptions about employees from different groups. Judge successes and failures
individually. Respond promptly and firmly when employees express prejudices or
stereotypes. Remind them of your policies that prohibit discrimination. Encourage employees
to view co-workers as individuals and judge them on their work, not on personal factors.
3. Encourage employees to work in diverse groups: Assure that work teams reflect the
diversity of your workplace. Diverse work teams let employees get to know and value one
another as individuals. Diverse teams also expand the experiences and views of all the
workers on the team and help them recognize the strength of their combined talents and
perspectives.
4. Base decisions on objective criteria: Expect all employees of all backgrounds to meet
required standards and perform to the best of their ability. Don’t set different criteria for
different groups. Don’t make excuses or allow employees to make excuses for shortcomings.
Base all employment actions, including discipline, on specific, performance-related criteria.
Always focus on job-related issues, not personal issues, when dealing with employees.
5. Be open-minded: Recognize, and encourage employees to recognize, that one’s own
experience, background, and culture are not the only ones with value to the organization. Set
an example of encouraging diversity by developing relationships with colleagues whose
backgrounds differ from yours. Look for ways to incorporate diverse perspectives and talents
into efforts to achieve organizational goals.

Strategic HRM Environment

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 Today the organisations operate in a very dynamic environment. The external and internal forces
are constantly changing the rules of the game, to face these changes the organisations and
businesses must develop new strategies to remain competitive. Changes in strategies determine
the direction of each division within the firm including HRM. HRM plays a very vital role in all
the operations of the organisation. In recent years, HRM has changed profoundly and it will
continue to change as the work needs of the organisations are constantly changing and becoming
more complex. Organisations are recognising the need for a strategic approach to HRM. HR
management can also offer competitive intelligence (like new incentive plans being used by
competitors, data regarding customer complaints etc.) that may be helpful while giving shape to
strategic plans.

Strategic Human Resource Management Process

1. Scanning the Environment: The process begins with the scanning of the

environment, i.e. both the external and internal factors of the organization. The external
environment encompasses the political, legal, technological, economic, social and cultural forces
that have a great impact on the functioning of the business. The internal factors include the
organizational culture, hierarchy, business processes, SWOT analysis, industrial relations, etc.
that play a crucial role in performing the business operations.

The role of the HR department is to collect all the information about the immediate competitors –
their strategies, vision, mission, strengths, and weaknesses. This can be done through the
resumes being sent by the candidates working with the other rivalry firm. Through these, HR
professionals can identify the workforce, work culture, skills of the staff, compensation levels,
reasons for exit and other relevant information about the competing firm.

2. Identify Sources of Competitive Advantage: The next step in the strategic

human resource management process is to identify the parameters of competitive advantage that
could stem from diverse sources as product quality, price, customer service, brand positioning,
delivery, etc.

The HR department can help in gaining the competitive advantage by

conducting the efficient training programmes designed to enrich the skills of the
staff.

3. Identify HRM Strategies: There are major four strategies undertaken by

an organization to enrich the employees capabilities:

a) Learning as Socialization: This strategy includes the techniques as training

courses, coaching sessions, education programmes to ensure that the
employees abide by the rules, value and beliefs of an organization and are able
to meet the performance targets.

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 b) Devolved Informal Learning: This strategy helps in making the employees
aware of the learning opportunities and the career development.

c) Engineering: This strategy focuses on creating and developing communities

of practice and social networks within and outside the organization.

d) Empowered Informal Learning: Through this strategy, the HR department

focuses on developing the learning environment such as knowledge about the
new processes, designing of new work areas and the provision of shared
spaces.

4. Implementing HR Strategies: Once the strategy has been decided the

next step is to put it into the action. The HR strategy can be implemented by
considering the HR policies, plans, actions and practices.
5. Monitor and Evaluation: The final step in the strategic human resource
management process is to compare the performance of the HR strategy against
the pre-established standards.

At this stage, certain activities are performed to evaluate the outcomes of the
strategic decision: establishing the performance targets and tolerance levels,
analyzing the deviations, executing the modifications.

Thus, to have an effective HR strategy the firm follow these steps systematically
and ensures that the purpose for which it is designed is fulfilled.

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